Bank loans can be obtained for many different purposes: home improvement, automobiles, education, home or apartment purchase, paying off other debts. Banks will want to know a great deal about you before they will lend you money. They will want to see stability in home and work and an excellent credit rating. They will also want collateral: something valuable you own they can take possession of and sell if you don’t pay.
Finance companies make loans like banks but don’t offer the other bank services like savings and checking. Finance companies are less strict about making loans than banks are. They lose more money to people who can’t pay and therefore their interest rates are higher than banks– much higher. However if you can pay the rates, borrowing from a finance company can let you get the products you want and help you build up a credit rating at the same time.
Next Section:Payday Loans
Personal Finance: Chapter Home
Life in the USA Home Page.